U.S.-China tensions are expected to rise and increasingly weigh on the technology sector – CNBC

The rising tensions between the U.S. and China could continue to hang over the technology sector, even though President Donald Trump on Friday stopped short of threatening Beijing with more trade actions.

The president said the U.S. was ending its preferential treatment of Hong Kong and terminated the U.S. relationship with the World Health Organization because it did not act aggressively enough to prevent the global spread of the coronavirus. The action on Hong Kong was taken in response to Beijing’s imposition of a new security law on Hong Kong.

The action is intended to revoke Hong Kong’s special treatment as a  separate customs and travel territory from the rest of China and was made in response to Beijing’s move to impose new national security powers over Hong Kong.

Stocks rose on Friday afternoon after Trump’s comments because he did not ratchet up trade tensions, while condemning China’s actions. The semiconductor sector is at the heart of the U.S.-Chinese technology relationship, and the VanEck Vectors Semiconductor ETF jumped to close up 2%.

“If he had done something more heavy handed, if he had done something to change the phase one trade deal, that would have been the fear that the market had started pricing in,” said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. 

The S&P 500 closed up a half percent at 3,044 after trading lower earlier in the day. Now traders are watching to see if China responds ahead of Monday trading.

“Basically, the items he